2 Reasons It Might Be OK for Keywords to Miss Their ROAS Target

A common debate for paid search campaigns is the right level of investment. There isn’t an agency in the country that during the business development phase of a project has not looked at an account and thought they could do better. There also isn’t a client or brand that hasn’t looked through their account and felt like they were wasting money. However, just like in an argument, the truth is somewhere in between. What I’d like to do in this article is encourage everyone to recognize the beauty in this debate and challenge themselves to think differently. Here are two ways I’d encourage you to think differently about your accounts’ return on advertising spend (ROAS).

1. ROAS Alone Does Not Equal Value

This one might seem counterintuitive because the entire point of your paid search campaign is to drive a positive return. However, there are many reasons this might not be the best determination of value. Some examples would be:

  • Profit: What has the highest ROAS doesn’t always mean it has the highest profit. Many businesses are striving to understand the bottom line impact as their primary target making ROAS secondary.
  • Incremental Revenue: If all the opportunities that are equal to or above your ROAS targets are gone should you stop investing? There is almost always incremental revenue to be had, but the question is do you view the results in aggregate as a portfolio or does each keyword need to meet its target? I recommend a portfolio view. This was the topic of my first ever Search Engine Watch article in 2009 and I think these arguments still hold true.
  • Customer Segments: What drives a high ROAS may not be the target consumer. Maybe you have to spend a little more to reach a different audience that will have a higher lifetime value?

I took a look at our client base and found that 18 percent of revenue our clients received came at a 2 or lower ROAS and about 35 percent came < = a 4 ROAS. The value of this data is to give some confidence to those of you out there who are struggling with the fact that not every keyword works all the time.

roas-by-revenue

2. Holistic Investments

Looking at a program holistically is the best way to go given the connectivity our industry is experiencing. Customers don’t think about their device or channel when going from research to purchase. They don’t think, oh I started by clicking a paid search ad on desktop so I should go back to that same keyword and buy. I think we all know that most people don’t even know if they are clicking on an ad or not, or even consider what influenced them to purchase. But as brands we need to think about how these experiences are connected. There are a lot of attribution tools to help and plenty of articles detailing various best practices, but ultimately you and your organization have to determine what is right for you. Still, 57 percent of the industry either doesn’t have an attribution model or still uses last-touch.

attribution-emarketer

Anyone that has been running paid media campaigns long enough can tell you there isn’t a silver bullet answer to this problem. The best advertisers in my mind are clear about their business goals. Once you know those goals you are in a much better spot to understand the tradeoffs in incremental revenue or the profit and revenue contributions your programs need to contribute to the overall business.

Homepage image via Shutterstock.

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